When you first purchase a home, you are faced with many fees and costs associated not only with the home itself, but also with the loan.
One such fee is title insurance. As you know from our countless other blog posts, there is Lender’s title insurance as well as Owner’s title insurance.
Your lender will require you to purchase this, as this protects your lender against problems with the title to the property. And then owner’s title insurance protects you – the homeowner – against issues that may arise concerning title, liens, etc. The owner’s policy lasts forever. You buy it once, and it’s good for as long as you’re alive.
But with the Lender’s insurance, the rules are a little different.
When you refinance your home, your old loan is paid off and therefore the title policy expires. So when you refinance, your lender will require a new loan policy on y9our new mortgage to protect their investment in the property. A separate policy is needed by the lender insuring the validity of your mortgage when it’s made. Your policy is valid for as long as you own the property, but it doesn’t insure the new mortgage created for you when you refinance, and it also doesn’t provide protection against events that may have transpired between the original purchase and this refinance.
Just as examples, perhaps in that time period between the initial purchase and the refi, you took out a second mortgage, or a mechanic’s lien was put on the property by an unpaid contractor. So much like we – as consumers – are always looking for ways to protect our interests, so is your lender.
For more information on Lender’s and/or Owner’s title insurance, we have many previous blog posts that you will find helpful and informative. Check them out at our website’s blog.
